Cullerton to propose school districts share in pension costs

CHRIS WETTERICH

Thursday

Feb 24, 2011 at 12:01 AMFeb 24, 2011 at 5:13 PM

SPRINGFIELD -- Downstate and suburban Chicago school districts would have to start paying a chunk of the costs of teacher pensions under a plan Senate President John Cullerton plans to introduce this legislative session.

SPRINGFIELD -- Downstate and suburban Chicago school districts would have to start paying a chunk of the costs of teacher pensions under a plan Senate President John Cullerton plans to introduce this legislative session.

The shift from the state being entirely responsible for downstate and suburban teachers’ pensions to a hybrid of state and local funding would be phased in, Cullerton told The State Journal-Register’s editorial board on Wednesday.

School districts would be responsible only for the “normal costs” of pensions – the cost of paying out benefits to retirees for the current fiscal year and funding part of the future benefits for teachers still on the job. The state would continue to pay down the debt created by decades of underfunding by legislatures and governors, Cullerton said.

Cullerton estimated that normal costs account for one-third of the state’s annual payments to the state Teachers’ Retirement System.

TRS confirmed that figure. In fiscal year 2010, the state paid $2.081 billion to TRS, according to TRS spokesman Dave Urbanek.

School opposition expected

The proposal is sure to draw intense opposition from local school districts, whose budgets are already strained. Money for the cost-shift would have to come from local property taxes unless state law was changed to allow school districts to impose sales taxes to pay for pensions.

“Last year, like many school districts struggling with decreases in revenue, Springfield Public Schools went through a difficult, emotional budget-cutting process and still had to borrow from its reserves to cut expenses,” said Pete Sherman, a spokesman for the district. “With new proposals to shift state transportation costs to districts and require districts to pick up services currently provided by Regional Offices of Education, taking on pension obligations on top of that adds to an already stressful fiscal situation for us.”

Cullerton said his idea is an alternative to calls from Republicans and the state’s business interests to reduce future pension benefits for current teachers, university employees and state workers.

Cullerton believes that approach is barred by the Illinois Constitution. He also noted that most of the cost of pensions for Chicago teachers is paid by the Chicago Public Schools itself.

“When they (school districts) sit down and negotiate contracts now, they don’t have to worry about the pensions” that result from the salaries agreed upon, Cullerton said. “They just have to worry about the salaries. So that’s not fair.

“I think it’s something the teachers’ unions should be in favor of. After all, in the last two years, the teachers’ unions had to rely upon us and we couldn’t even make a payment. We had to borrow both times. …

“The schoolteachers themselves should realize that they are more likely to not have those payments be skipped when you get some money from the school districts. In terms of fairness, we’re already doing it in Chicago.”

Teachers open to idea

The Illinois Federation of Teachers is open to the idea, said spokesman Dave Comerford.

“The details would be a huge factor in a decision like that,” Comerford said. “You’ve got to figure some way not to make this a huge, unfunded mandate. There’s got to be something to help districts out. Otherwise … the state is dumping its responsibilities on the school districts.”

Under state law, teachers contribute 9.4 percent of their salary to the pension system. The school districts pay 0.58 percent.

The state, meanwhile, is supposed to pay an amount based on a 1995 law that was designed to bring the teachers’ pension system to a 90 percent funding level by 2045. Since fiscal year 2005, however, the state has at times deviated from that schedule because of borrowing or partially skipping payments, resulting in higher payments in later years.

Cullerton said revising that schedule is another possibility to ease the state’s pension pain.

Urbanek said TRS had no comment on Cullerton’s idea.

“That’s a policy matter that legislators will decide,” Urbanek said

Patty Schuh, a spokeswoman for Senate Minority Leader Christine Radogno, R-Lemont, said that, given the state’s dismal financial condition, all proposals have to be up for discussion. The state does provide a $37 million annual subsidy to Chicago teachers’ pensions, she said.

“Every action the state takes regarding local funding, there is a reaction,” Schuh said. “We want to talk about the opportunity to reduce state spending, not just shift it somewhere else.”

Chris Wetterich can be reached at (217) 788-1523.

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